When Can the IRS Levy my Property or Garnish my Wages?

Posted by Jeffrey Siegel on July 16, 2019

Before the IRS can levy a taxpayer on an outstanding balance, it must issue a series of notices or letters regarding the outstanding balance due. 

A taxpayer will receive their first notice regarding a balance due after the tax has been assessed, i.e, after the return is filed or an audit is concluded.  If the balance due is the result of a tax return, the balance due notice will be sent about 4 to 6 weeks after the current year tax return was filed.  The older the tax return (for previous tax years), the longer the IRS takes to process, and the longer it takes for a taxpayer to receive the balance due notice (CP-14).  The balance due notice informs the taxpayer of the total tax due on the tax return, the amount of any tax withholdings, estimated tax payments, total payments and credits, penalty and interest. 

If the balance due is not paid by the due date on the CP-14 notice, in about 5 weeks, the IRS will issue a second notice CP-501.  This a reminder notice of the balance due, and provides instructions to the taxpayer on how to pay the balance due (in full or in monthly installments).   The CP-501 notice also informs the taxpayer that if the amount is not paid in full, the IRS can issue a Notice of Federal Tax Lien, interest will continue to increase and penalties may apply.  If the taxpayer does not respond to the CP-501 notice, the IRS will issue the CP-503 notice.  The CP-503 is another reminder notice of the balance due and the taxpayer has not paid the tax or has not responded to the IRS.

If, after these 3 notices, the taxpayer has not paid the balance due or has not made any payment arrangements, the IRS will issue a CP-504 via certified mail to the taxpayer.  This notice is more aggressive than the reminder notices.  The CP-504 notice states that the IRS can issue a levy against a state tax refund and can also file a Federal Tax Lien if they have not done so already. 

If the taxpayer still does not respond, the IRS will issue a LT-11 (or CP-1058, or CP-90), Notice of Intent to Levy and Right to a Hearing via certified mail.  This means that the IRS is ready to attach a levy to a taxpayer’s wages and/or bank accounts to collect the unpaid tax.  However, before the IRS can issue a levy, the taxpayer has a constitutional right to request a hearing.  The response to a timely request for a Collection Due Process Hearing must be within 30-days of the notice.  If the taxpayer files a request for an appeal, the IRS will not issue a levy on the specified tax periods during the appeal process.  However, if the taxpayer does not file a request for a hearing, the IRS can issue a levy after 45 days of the date of the LT-11, CP-1058, or CP-90 notice.

Need back tax help in Kansas City?  Bank account levied in Kansas City?  Paycheck garnished in Kansas City?  Lien on business or home in Kansas City? If you or a client need help fighting off the IRS, call Jeffrey R. Siegel, your Kansas City tax attorney.  We help with IRS liens, wage garnishments, levies, offers in compromise, innocent spouse relief, federal employment tax, Trust Fund Recovery Penalty and installment agreements.  Bring back some stability to your life, and call (913) 735-4829.